Also see our handout: Understanding the equalization rate.
Equalization rate formula
An equalization rate is New York State's measure of a municipality's level of assessment.
Total assessed value of the municipality ÷ total market value of the municipality = Equalization rate
Equalization rates are percentages
Equalization rate = 100:
- town is assessing property at 100% of market value
- most likely a reassessment was conducted in recent years
- your property's assessment should be roughly its market value (the price for which you could sell your property)
Equalization rate < 100:
- overall property in the town is assessed less than market value
- the lower the equalization rate, the longer it has probably been since the last reassessment
- equalization rate of 43 means overall property in the town is assessed at 43% of market value
Equalization rate > 100:
- overall property in the town is assessed higher than market value
- property values may have decreased since the last reassessment, but assessments were not adjusted downward
Find your equalization rate
In order to contest your assessment, you will need either your equalization rate or residential assessment ratio. You can find both of these numbers from our Municipal Profiles Web site - search or select your county or municipality and select "Current Equalization Information" or "RAR Information."
Equalization rates are necessary in New York State
- Each municipality determines its own level of assessment (this is in contrast to most states that require one level of assessment statewide).
- Hundreds of taxing jurisdictions - including most school districts and counties - do not share the same taxing boundaries as the cities and towns that are responsible for assessing properties.
In order to distribute school district or county taxes among multiple municipalities, the level of assessment of each municipality must be equalized to full market value.
Total assessed value of the municipality ÷ equalization rate of the municipality = full market value of the municipality.
Equalization rates wouldn't be necessary if all municipalities assessed property at 100% of market value.
Once the full market value of each municipality is determined, the school district or county can determine how much in taxes should be collected from each municipality.
Most of the state's more than 700 school districts distribute their taxes among segments of several municipalities, many of which have different levels of assessment. The number of municipal segments in a school district ranges from one to as many as fifteen.
For an example of school tax distribution using equalization rates, see an example of school tax distribution.
Equalization rates do not correct unfair assessments within a municipality
Equalization rates measure the level of assessment for the entire municipality. They are not intended to correct unfair individual assessments in a city or town. The assessor has the primary role in ensuring the fairness of individual assessments. The more frequently properties are reassessed based on current market values, the more likely it will be that assessments are fair. Property owners also have a role to ensure their individual assessments are fair.
Equalization rates are based on local data
Assessment rolls include the municipal level of assessment (LOA) - typically listed as the "uniform percentage of value." We determine equalization rates by analyzing the LOA. Based on national standards, we review the LOA to determine if it is within adequate tolerances to be used as the equalization rate. In municipalities where we cannot confirm the LOA, we use our own independent estimate of total market value to determine the equalization rate.
Other uses of equalization rates:
- establishment of tax and debt limits
- allocation of costs, such as for jointly operated hospitals among participating localities or an injury to a volunteer firefighter, etc.
- determination of state assessments (special franchise) or approval of local assessments (state-owned land)
- determination of ceilings (railroad and agricultural values) and exemptions
- determination of level of STAR exemptions
- apportionment of sales tax revenues and joint indebtedness
- as evidence in court proceedings on the issue of assessment inequity and small claims assessment review hearings
School District AB needs to raise $1 million through property taxes (thus, a levy of $1 million). The district contains all of Town A and all of Town B. Each town has a total assessed value of $10 million. If the $1 million tax levy simply were allocated on the basis of the assessed values, the taxpayers in both towns would evenly split the levy, with each town paying $500,000.
However, the two towns have different levels of assessment. Town A has an equalization rate of 33.33 and Town B has an equalization rate of 50.00.
Towns A and B need to be equalized in order to fairly distribute the school tax levy:
|Town A||Town B|
|Assessed value (AV) of each town||$ 10 million||$10 million|
|Equalization rate of each town||33.33%||50.00%|
|Market value of each town||$30 million||$20 million|
|Market value of school district AB||$50 million|
|Percent of market value (and, therefore, percent of levy)||60%||40%|
|Tax levy to be raised from each town||$600,000||$400,000|
|Tax rate for each town (tax levy ÷ assessed value) x 1000||$60 per $1,000 of AV||$40 PER $1,000 of AV|
The change in a town's total market value relative to other towns in the same school district (or county) can cause the town's share of the tax levy to increase or decrease. If one municipality's market value increases, but all the other municipalities in the taxing jurisdiction increase to a larger degree, then the first municipality's share of the tax levy will decline.